The government is considering Bulb Energy’s (Bulb) future prospects after the auction process of the ailing energy firm only received one bid.
It was the first time that Octopus Energy (Octopus) submitted an offer to purchase Bulb as reported in the Financial Times – after Masdar Energy (Masdar) and British Gas owner Centrica both have pulled out of the race this month.
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Masdar the Abu Dhabi-based firm had held talks with the government, but decided not to submit a proposal.
They could, however, offer financing to Octopus.
Octopus is the fifth-largest energy supplier with more than 3 million clients.
It has already acquired several hundred thousand customers using this supply of last resort procedure which includes Avro Energy’s complete customer base.
The Government has been determined to dispose of Bulb since it entered the de facto process of nationalisation in November last year however the collapse of bids has left it in a weaker position to negotiate.
Bulb was the first energy company to go into special administration in November of last year, with the firm struggling to cope with rising wholesale costs and the limitations that the cap price.
It was thought to be too big to be considered a supplier of last resort procedure that has seen nearly two million customers shift from firms that have been destroyed to suppliers.
Since since then, Bulb and its parent company Simple Energy have been overseen by administrators Teneo and Simple Energy.
In the last eight months, it’s able to keep up the regular transfer of public funds. Estimated to be more than PS2bn which is the largest state bailout since the bailout of Royal Bank of Scotland in the year 2008.
In addition to operating expenses, Bulb is gobbling up cash due to regulations of the government that don’t allow it to hedge or purchase in advance the energy it offers.
It is now exposed to fluctuating gas prices which have increased dramatically since Russia entered Ukraine.
Despite the chaos, it is the seventh largest provider in the United Kingdom with 1.7m customers. However, there is a risk that customers will flee to other suppliers due to the turmoil.